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Suzuki of Japan Attributes Yen Value to Multiple Factors Beyond Interest Rate Differences

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Japanese Finance Minister Shunichi Suzuki has addressed the concerns surrounding the yen’s current position, which is hovering at a 34-year low against the dollar. Suzuki emphasized that the exchange rates are influenced by various factors and not just the interest rate gap with the US.

During a meeting of finance ministers and central bankers from the Group of 20 nations in Washington, Suzuki highlighted that economic conditions, market sentiment, and speculation also play a crucial role in determining exchange rates. Currencies were not on the G-20 agenda, but Japan reaffirmed close communications on foreign exchange with its peers.

In previous G-20 meetings, members have agreed on a foreign-exchange policy that allows nations to counter excessive currency moves perceived as harmful to their economies. Suzuki and Masato Kanda, Japan’s top currency official, expressed concerns over the yen’s weakness, prompting discussions on potential currency interventions.

US Treasury Secretary Janet Yellen acknowledged the “serious concerns” regarding the yen and the Korean won during a meeting with Suzuki and South Korean Finance Minister Choi Sang-mok. The US-Japan interest rate gap has widened, affecting the yen’s value, with implications for Japan’s inflation through higher import costs.

Bank of Japan Governor Kazuo Ueda indicated that the yen’s slide may lead to a change in monetary policy and will impact the BOJ’s new price and growth projections due on April 26. The ongoing situation underscores the challenges posed by the currency dynamics on Japan’s economy.

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